Discover the Difference Between General Liability and Umbrella Liability Insurance

General liability and umbrella liability are two different insurance products that provide specific protections. In order to make wise decisions about what kinds of insurance you’ll need, learn what each policy provides.

General Liability

Farm Bureau Insurance’s traditional homeowners insurance policy comes out of the box with general liability coverage for accidents that may occur on your property.

However, you can choose to increase the amount of liability coverage on this policy for additional financial protection or purchase a separate general liability policy. Every person who owns property is subject to possible lawsuits asking for damages for bodily injury, property damage, medical payments, and more. If you have frequent guests on the premises, consider increasing this general liability limit.

Umbrella Liability

If you’re sued for damages, and the damages exceed the amount of your insurance policies, whether they be auto insurance, homeowners insurance, boat owners insurance, etc., umbrella insurance kicks in to cover the rest of what you owe.

Below is a fictional scenario where the policyholder used their umbrella liability policy to pay for the remainder of their settlement after a boat accident.

Example Scenario: Watercraft Collision

Boats in Arkansas have a state minimum requirement of $50,000 in liability insurance to legally operate.

  • In an example scenario, you are sued for an accident where your fishing boat collided with a pontoon boat. You settle with the claimant for $500,000.
  • The “underlying” boat policy is the primary policy and pays the policy liability limit of $100,000.
  • Your Umbrella policy has liability coverage of $400,000 with a deductible of $100,000.
  • The Umbrella policy kicks in because your boat policy limit has been exhausted, and your $100,000 deductible has been met by the underlying policy payment. Your umbrella policy pays the remaining $400,000 to satisfy the settlement.
  • In this example, without the Umbrella policy, you would be responsible for the additional $400,000 not covered by your boat policy.

No Umbrella Policy

Settlement 500,000.00
Liability Coverage – 100,000.00
Damages Owed $400,000.00

With Umbrella Policy

Settlement 500,000.00
Liability Coverage– 100,000.00
Umbrella Insurance– 400,000.00
Damages Owed $0.00

If you have other policies with us, such as auto insurance, the umbrella policy would apply similarly to damages resulting from a car accident.

Protect Yourself from the Risk of Damages with Farm Bureau Insurance

Don’t find yourself on the end of litigation that has bankrupted you. Speak with a Farm Bureau Insurance agent who can help you determine the right amount of liability coverage to manage your risk.